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Board reviews fund balance policy, hears finance director report that town stands well above 18% policy target
Summary
Board members reviewed the town's fund balance policy and heard the finance director report that audited fund balance stood at about 26.53%; discussion clarified CNR, general fund, and tax stabilization rules and noted one-time revenue items and reimbursements that have bolstered reserves.
The Board of Finance reviewed the town's July 2022 fund balance policy on June 9 and heard the finance director's quarterly report showing the town's audited fund balance was materially above the policy's 18% target.
The finance director (Brad) told the board that the most recent audited figure was about 26.53% and that higher-than-expected interest income'roughly $1.5 million to $2 million over budget in recent periods'has contributed to the reserve level. He described the fund balance policy'which seeks to keep reserves at 18% of operating budget'and reviewed the relationship among the general fund, fund balance, and CNR (capital non-recurring) accounts.
"Pretty much it talks about that, uh, we're going to do everything in our power to stay above 18% fund balance," the finance director said, describing the policy's purpose and the board's discretion on how excess balance can be used. Board members asked whether some funds should be returned to taxpayers or used for near-term capital projects; staff cautioned that interest earnings can decline and that some uses require referenda or town meeting votes.
Discussion touched on recent and pending capital reimbursements, including state education-related reimbursements for school projects and expected LOPI/LOIP payments; the board also discussed the town's tax stabilization fund, which was described as a separate account with specific contribution and withdrawal limits set by policy.
The board moved and approved the finance director's report. Staff will continue quarterly budget reviews with department heads and return with routine updates on capital reimbursements and CNR/project accounting.
